The 21st Century state begins to take shape today at a meeting of software developers whose business applications will be taking over functions of central government.

HM Revenue and Customs called the meeting to tell them how to fulfil its “vision” for parts of central government to be dissolved and automated by a distributed software infrastructure, built into financial software used by the nation’s businesses and their accountants.

The incredible vision was slipped out in a technical report about the ongoing computerization of tax operations at HM Revenue and Customs last week.

It involved business software producers building government checks into their applications. So enforcement and compliance work currently done by about 26,000 tax inspectors would be taken over by the software used by people’s accountants or in the finance department of their employer.

As well as a radical privatization of central government, HMRC’s distributed software automation would subvert the defamed conventional model of outsourced government, whereby big government departments employed big outsourcing companies to build central computer systems that tens of thousands of staff would use to conduct transactions with millions of people across the country.

The plan proposed instead a sort of outsourcing for the networked age: every business and accounting firm in the country doing a little bit of tax processing that would otherwise have been handled by some of the 60,000 people employed at HMRC on computer systems built under a sole contract it signed with Capgemini for £8.5bn in 2004.

HMRC said it developed the plan to make sure people paid their taxes. It missed opportunities to collect £34.5bn in taxes last year through avoidance, criminals, the black market, legal loopholes, evasion and neglect, according to the National Audit Office.

The department said it envisaged a business software industry that was booming after taking over central government functions, and of their customers benefiting in unforeseen ways from a greater variety of software producers competing (it was imagined) more intensely over the opportunity to build tax inspecting functions into their systems.

It did however continue other work to combine the software of business and government into a single distributed financial system – effectively, the infrastructure of a decentralised state.

HMRC has since 2010 built links with banks and employers to check people’s pay packets in its Real Time Information system (RTI). It has also built links with the card payment industry and credit agencies to track people’s lifestyle habits in an effort to catch crooks, cheats and bumblers in the act of doing other than paying tax. It has also built more intimate links with businesses by getting their tax returns as data feeds.

Its latest vision grew from this and other work to build “Application Programming Interfaces” (APIs) on top of its own systems, so business software producers could feed and draw from its databases to process things like corporation tax, export controls, and VAT returns, without having to employ whole offices of people to shuffle, stamp and shuttle paper.

HMRC’s vision – drearily titled as its ‘third party tax software and application programming interface (API) strategy’ – would turn its own software interfaces into more than mere portals through which business software producers communicated with its administrative systems, as they had been till now. HMRC’s software interfaces would distribute “business rules” and more intimate data from people’s tax records so employers could take over compliance checks done by HMRC.

“Through better APIs, third party software will be able to use the same rules and logic that HMRC services use,” said the strategy document.

Its APIs would “prepopulate” the nation’s business applications with HMRC data. This would for reasons unexplained tighten HMRC’s grip on non-compliants. Software producers would “build risking capabilities into their software”, it said. The document was vague, repetitive and promotional. HMRC said it would elaborate its vision to members of the software industry at a meeting in London on Monday. Members of the public or their representatives in the press would not be invited.

It had identified 600 software companies it would encourage to modify their software to do its work. These would no doubt include Sage, the accounting software firm that recently took as its CEO Stephen Kelly, who ran the Cabinet Office programme to reform big, central government departments by curbing their spend on big outsource contacts and “digitizing” their back offices by farming their functions out to computer software producers.

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